Master Direction on Deposits and Accounts
Master Direction on Deposits and Accounts
Opening, holding and maintaining foreign currency accounts by a person resident in India is regulated in terms of section 9 of the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 issued vide 1Notification No. FEMA 10(R)/2015-RB dated January 21, 2016. Maintenance of deposits/ accounts between a person resident in India and a person resident outside India is regulated in terms of sub-section (3) of section 6 of the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Deposit) Regulations, 2016 issued vide 2Notification No. FEMA 5(R)/2016-RB dated April 1, 2016. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications.
2. To operationalize the Regulations as may be necessary, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999.
3. Instructions issued on maintenance of deposits and accounts under the Foreign Exchange Management Act, 1999 have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix, which continue to remain in force. Reporting instructions can be found in Master Directions on reporting (Master Direction No. 18 dated January 1, 2016)
4. The present amendment in this Master Direction is aimed at consolidating the directions pertaining to Vostro accounts of non-resident banks hitherto contained in Part B and paragraph A.(x) of Part E of Master Direction – Risk Management and Inter-Bank Dealings (FMRD Master Direction No. 1/2016-17 dated July 5, 2016, as amended from time to time). Alongside, a reference to the directions related to Special Rupee Vostro Accounts and the Vostro Accounts of Non-Resident Exchange Houses have also been added to the Master Direction and presented in a newly inserted Part III of this Master Direction.
5. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously.
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